Category Archives: Neo-Liberal economics

Alternative and/or Socialist Economics are overdue a revival

Politicians have constantly complaining about economists, usually for not giving them the they want. Only recently Michael Gove a leading Brexit campaigner complained that the people were fed up with experts. What he was complaining about was the fact that economists weren’t making the upbeat predictions about Brexit that he wanted. It was disappointing to him that all these economists who were backing the free market reforms of his government were no longer supporting him.

Michael Gove is typical of many politicians in their misunderstanding of economics. While throughout the course of his political career economists tended to speak with one voice, that of the Neo-Liberal free marketers, that resulted from the suppression of alternative economic voices. Free market economists of the Chicago school dominated the universities and the professions, maverick economists were marginalised or silenced. When he proposed that the UK leave the European Union, the largest and most prosperous free market in the world they could not support him. What he had misunderstood that while some economists were willing to ignore the evidence that a precipitate break from the EU would be bad for the EU economy, most economists subscribe to the view that there subject is evidence based and could not back a policy that was contrary to the facts. Free market economists could not support a policy that led to the U.K. breaking with the world’s largest and most prosperous free market.

However Michael Gove is not totally to blame for his misunderstanding of the nature of economics. Economists fail to recognise the divisions within society and the conflicting interests of the various groups that make up society. What they prefer is one ‘great theory of economics’, a theory that explains everything and benefits all. In the 1980s for a variety of reasons mainstream economists adopted the free market economics of the Chicago School. This is its essence stated that the free market brought about the most equitable of outcomes. The free bargaining of sellers and consumers would deliver the best outcomes for all. No longer would the state be ineffectively second guessing what the people or consumers wanted.

Contrary voices such as that of Michael Polanyi were ignored. Michael Polanyi argued that the unregulated free market was the worst possible of outcomes. He stated that the state was in effect could be better at second guessing what people wanted, than the market. In a free market the rich and powerful have undue influence over how the goods and services that the economy produces are distributed amongst the people. Not only could they claim the lions share of the wealth, but they could also deny the majority a fair share of the nations wealth. The health care system in the USA provides an example of his thinking. There the well off can have access to the best health care in the world, but also deny access to adequate health care for the majority. Health care in the USA is run by for profit health care providers. These health care businesses are usually companies owned by shareholders. Those share holders that hold a majority of the companies shares are the super rich and they are not going to permit their business to provide loss making services, as they want the best possible return on their investment. The provision of universal health care to the less well off is a loss making service, so it is not provided. The poor and less well off instead have to rely upon the health care provided by the hospitals run by charitable institutions. These institutions are poorly funded and cannot provide the best of care. Michael Polanyi would argue that health care is a universal good, as all have a right to good health care and only a state run health care service can provide health care for all.

When only one voice is heard the result is bad policy making. Michael Polanyi has long since been forgotten and the government only gets policy advice from free marketers of the school of Friedrich Hayek and Milton Friedman. Now al too often government policy has been that of trying to fit square pegs into round holes. Every government embarks on a new policy to make health care services more market efficient, each reform costs billions, yet is considered necessary by each new government. Never does any health minister ever stop to think that their policy might be wrong and that there are alternatives to remaking the NHS into a faux free market. What all ministers believe is that by dividing the NHS into competing buyers and sellers (hospitals are sellers, selling there service to the various local health trusts) they get the most efficient of health services. Never do they understand that each new bureaucratic structure they impose on the NHS is yet another costly diversion of resources away from front line services and that these expensive bureaucracies may prevent health care being provided in the most effective and efficient way.

What economists know but politicians do not. Is that a health service run by health care professionals might adopt some wasteful practices such as over ordered get of medicines, but the cure for this problem is far more costly. If the most efficient distribution of medicines is to be ensured a new bureaucracy of stock controllers, accountants and financial controllers of all kinds. The cost of these bureaucrats far exceeds the cost of any over ordering by medical professionals. In the well managed private hospitals of the USA administrative costs account for 40% of the costs of running the business. Unfortunately in the U.K. the government with its various reforms is trying to divert an increasing share of the health care budget to these financial controllers.

Although Michael Polanyi who once was a well known economist he is now virtually unknown amongst contemporary politicians. Contemporary economists are overwhelming free market economists and little is published that is contrary to the consensus view. What is now needed is a ‘Dead Economists’ society. A society that popularises all the policy prescriptions of these long dead economists. There are a number that I can recall such as Michael Polanyi, J.K.Galbraith, Piero Staffa and John Maynard Keynes. If politicians were familiar with Friedrich Hayes’s work other than his short populist text, ‘The Return to Serfdom’, they would realise that he would have been critical of much ill thought out policy making. There are numerous economists who have written about the problems that face contemporary U.K. and suggest policy solutions, but all are ignored. What politicians want are the simple easy to under policies offered by the free marketers, they have little patience with good economic practice, as it is time consuming and does not offer the simple answers that make good headlines in the popular press. Donald Trump rather than be seen as a maverick politician contrary to the mainstream of politicians, should seen as representative of current political process in which politicians have a limited time span and want solutions produced within five minutes.

Advertisements

Our Dirty Streets are not so much a consequence of Neo-Liberalism as the Poor Policy Choices made by our Politicians

As a fan of Scandinavia noir I am always struck by the cleanliness of the streets, which is such a contrast with the streets of the city where I live. Italy is always said to be a country where local government does not work, yet my experience of Italy is very different. When I stayed in Pisa, I would always come across the street cleaners when returning to my hotel late at night. Apparently the council was concerned that leaving rubbish uncollected in the streets would encourage rats and mosquitos. (Obviously there are exceptions, as in Naples where the Camorra control refuge collection.) British towns and cities seem to demonstrate a certain air of neglect, it is obvious that refuge collection is not a priority. What is not realised is that this dirtiness of the British city is not so much a characteristic of the national character, but a consequence of policy decisions of government.

This is a neglect imposed on local communities by central government consequent on it adopting the policies of Neo-liberalism. One of the tenets of Neo-liberal practice is that private enterprise is superior to public enterprise in the provision of goods and services. If however the state or local authority preferred to keep a service within the private sector, it should be run as if it was a private business enterprise. In practical terms this meant respect for the bottom line. If the private sector ethos was adopted by the public sector the same level of service could be delivered at a lower cost of the tax payer. Also these efficiencies in service provision meant that more could be delivered for less.

When working as a manager in local authority social services, I encountered this new philosophy first hand. The funding to local government had been cut and I was at a meeting with fellow managers to discuss how best to implement these cuts. This particular meeting was about home care; the local authority employed care staff to look after the elderly and the house bound. Our senior managers were enthusiasts for this new philosophy of work and had decided that twenty minutes of care would be all that any housebound individual needed. What we agreed on was a certain minimum of care that could be achieved in twenty minutes. Light dusting only was permitted in the room in which the individual spent most of their time. Using a vacuum cleaner to clean the carpet was forbidden, as it would take up too much time. There were a whole of list of don’ts, that is time consuming care activities. To ensure that the staff were not tempted to do more than the minimum, they were given so many clients to visit, that if they did more than the directed minimum, they would end up working more hours than those for which they were paid. This new service delivery scheme was regarded as a success as it mean fewer care staff were needed for home care, which meant a big cost saving for the local authority. What the housebound elderly or sick wanted was irrelevant.

A similar approach is applied to refuge collection. Funding for such has been cut by the central government to encourage the adoption of cost cutting efficiency As a fan of Scandinavia noir I am always struck by the cleanliness of the streets, which is such a contrast with the streets of the city where I live. Italy is always said to be a country where local government does not work, yet my experience of Italy is very different. When I stayed in Pisa, I would always come across the street cleaners when returning to my hotel late at night. Apparently the council was concerned that leaving rubbish uncollected in the streets would encourage rats and mosquitos. (Obviously there are exceptions as in Naples, where the Camorra control refuge collection.) British towns and cities seem to demonstrate a certain air of neglect, it is obvious that refuge collection is not a priority. What is not realised is that this dirtiness of the British is not so much a characteristic of the national character, but a consequence of policy decisions of government.

This is a neglect imposed on local communities by central government consequent on it adopting the policies of Neo-liberalism. One of the tenets of Neo-liberal practice is that private enterprise is superior to public enterprise in the provision of goods and services. If however the state or local authority preferred to keep a service within the private sector, it should be run as if it was a private business enterprise. In practical terms this meant respect for the bottom line. If the private sector ethos was adopted by the public sector the same level of service could be delivered at a lower cost of the tax payer. Also these efficiencies in service provision meant that more could be delivered for less.

When working as a manager in local authority social services, I encountered this new philosophy first hand. The funding to local government had been cut and I was at a meeting with fellow managers to discuss how best to implement these cuts. This particular meeting was about home care, the local authority employed care staff to look after the elderly and the house bound. Our senior managers were enthusiasts for this new philosophy of work and had decide that twenty minutes of care would be all that any housebound individual needed. What we agreed on was a certain minimum of care that could be achieved in twenty minutes. Light dusting only was permitted in the room in which the individual spent most of their time. Using a vacuum cleaner to clean the carpet was forbidden, as it would take up too much time. There were a whole of list of don’t, that is time consuming care activities. To ensure that the staff were not tempted to more than the minimum, they were given so many clients to visit, that if they did more than the directed minimum, they would end up working more hours than those for which they were paid. This new service delivery scheme was regarded as a success as it mean fewer care staff were needed for home care, which meant a big cost saving for the local authority. What the housebound elderly or sick wanted was irrelevant.

A similar approach is applied to refuge collection. Funding for such has been cut by the central government to encourage the adoption of cost cutting saving measures and the ending of what were seen as over friendly employee policies. The local authority can only manage this service by giving a time limit to each individual household refuge collection. Speeding up refuge collection is achieved by making householders take there bins on the pavement for collection. These refugee collectors know that if they delay themselves by collecting the rubbish strewn in the street, they will be unable to complete there work in time forcing them to work for free in their own time to finish their round. In consequence any difficult or time consuming tasks are left undone. Problematic streets or houses will be left untouched, as to tackle them would be take up too much time. Given human nature, the refuge collectors will be tempted to avoid the more difficult tasks claiming that it would contravene their terms of employment, which demands the minimum of time spent on each task. When the work practice emphasises quantity not quality, it is easy to understand why our streets remain dirty.

What has been had the most impact on the provision of public service provision is the self denying ordinance adopted by the politicians. The one that tells them that they should never interfere in the free market and that free markets work best if all power is ceded to the entrepreneur. If all entrepreneurs were gifted and benevolent this would be fine. Instead they have used this freedom from regulation and oversight to enrich themselves at the expense of society and the state. They have been given a licence to make money, a licence that imposes no obligations on them. Only today I read an article explaining how a property developer could make £50,000 a year. All they had to do was convert a house into a series of micro flats and charge the tenants exorbitant rents. This £50,000 would in come in part or wholly from the state. Either the tenants received tax credits to help pay their rent or the tenants received housing benefit which would be used to pay the rent. Only recently two major rail companies walked away from a contract the run the East Coast railway. The government never questioned there reasoning, it was sufficient for them to claim that the continue to operate the railway would cause them to lose money.

Rather than blaming Neo-Liberalism for this situation, it is the politicians who are to blame. They failed to have an elemental grasp of human psychology. If you give a group of powerful and ruthless people the freedom to act as they please, they will do just that. If profit maximisation is the sole motivating factor for running a service, the business owners will do whatever they can to maximise their profits. If reducing the quality of the service improves profits, that will be done. One illustration of this is a proposal by one of the privatised rail company was to strip all the seats out of the carriages in its commuter trains and replace them will diagonal resting places. This would have enabled the company to squeeze even more people on to its trains, increasing both revenue and profits.

Our politicians are as hapless babes in the cut and thrust of the market place. When a business tenders for a large contract, it incurs substantial costs in drafting that tender. If it fails to win the tender it will have to bear the cost of failed bid. Our political babes have allowed those who submit losing tenders, to sue them for the money they lost in preparing the contract. These naive innocents are quite happy to acquiesce in this most uncommercial of practices. The business men and women who compete for contracts for the privatised services have been more or less able to draft the terms on which they compete for government business.

What renders our politicians so helpless is that they have so decimated the civil service and local government in there desire to create a small minimal cost government, that they lack the staff who are either qualified or experienced to manage out sourcing successfully. Not so long ago the staff devising a contract for the running of a railway service, were so incompetent in their drafting and in the subsequent negotiations, that the losing tenderer was able to successfully take the the Ministry to court and win back the contract it had lost. It is not unknown that for a government so lacking in-house expertise, that it will turn to one of the large accounting companies asking them to draft the out sourcing contract. This same accountancy company could also be advising one of the companies bidding for that contract. With the out sourcing of government services to the private sector, it is always win, win for the private sector and lose, lose for the government.

Returning to the start of my essay the dirty streets of British towns and cities is a consequence of the adoption of least cost minimal service practices, associated with out sourcing and competitive tendering. This could be said to be a consequence of the adoption of Neo-liberalism, but really it’s down to the naivety of the political classes. To put it another way the wrong people are in charge of the provision of public services, people with the wrong mindset. When for those in charge the priority is the bottom line, non profit making services will be delivered for the lowest cost, even if that means the service is minimal and delivered barely acceptable standards. What is needed is the services to be put in the hands of those whose priority is to maximise the common good. Obviously cost efficiency is important but it should not be the main criteria for service provision. The least cost health care option is to provide no health care, but it is not necessarily the best option. measures. The local authority can only manage this service by giving a time limit to each individual refuge collection. Speeding up refuge collection is achieved by making householders take there bins on the pavement for collection. These refugee collectors know that if they delay themselves by collecting the rubbish strewn in the street, they will be unable to complete there work in time and will be forced to work for free in their own time to finish their round. In consequence any difficult or time consuming tasks are left undone. Problematic streets or houses will be left untouched, as to tackle them would be take up too much time. Given human nature, the refuge collectors will be tempted to avoid the more difficult tasks claiming that it would contravene their terms of employment, which demands the minimum of time spent on each task. When the work practice emphasises quantity not quality, it is easy to understand why our streets remain dirty.

A new and unusual solution to economic policy making. ‘Wittgensteinian’ Economics.

Recently I have been reading Ray Monk’s biography of Wittgenstein. In reading this book I realised that Wittgenstein’s approach to philosophy opens the possibility of there being a different approach to economics. What Wittgenstein is always criticising philosophers for is there constant search for the one grand theory, the unifying theory that answers all the questions. There was he argued no grand theory and it was pointless looking for one. This is an approach that I believe should be adopted in economics.

There is at present one theory that dominates economic policy making and that is what might be termed free market economics. One small book Hayek’s ‘The Road to Serfdom’ is the origin of all current thinking on economics. Usually today it is known as Neo-liberal economics, an economic philosophy associated with the political right. Although there is a left of centre variant, new Keynesianism. Proponents of the latter claim to have rediscovered in Keynes writings his love for the free market and put to one side Keynes radicalism.

Keynes radicalism was the consequence of his despair at the misguided policy making of the governments of the 1920s and 30s. Usually the policies of the 19th century Parisian commune are ridiculed by economists. One policy that was held up to ridicule was the policy of having the unemployed dig up the paving stones, only to replace them later. The unemployed were paid a wage for this work. Economists saw this as a foolish waste of money that did little to improve the economy. However as Keynes pointed out this created an income for the unemployed and that there spending could help bring a dormant economy back into life.

What this illustrates is that Keynes was asking a different question to that asked by his contemporaries. He was trying to find an answer to the question, how do we bring to an end the misery of mass unemployment? His academic colleagues were asking a different question, how do we restore a dysfunctional economy back to being a fully functioning one that will in the long term work to the benefit all? Different questions have different answers. While Keynes advocated greater government spending to increase the demand for labour to reduce unemployment; they wanted to cut government spending, believing that only a prolonged period of sound finance and balanced budgets could create the strong economy, an economy which would eventually generate new economic growth and so ending the time mass unemployment. All this government could say to the unemployment was to have patience, as eventually the economy would pick up and they would have jobs. Keynes had one answer to this policy and that was in the long run we are all dead. There was also the unspoken assumption that growth generated by Keynes spending policies would be bad growth, whereas the economy eventually moved into the upswing in the trade cycle that this was good growth. A set of unprovable and dubious assumptions

When George Osborne adopted a similar policy in 2010, that of fiscal consolidation, cutting government expenditure and balancing the books, he repeated all the errors of the politicians of the 1920s and 30s. Mass misery, although this time not caused by unemployment, but low wages and the insecure employment of the ‘gig’ economy.

Wittgenstein’s last book was ‘Philosophical Investigations’ crystallised my thinking on economics. Rather than believing that there was one grand unified theory of economics, there are series of economic investigations which belong to one family, as they all bear a familial resemblance. The economy as subject matter is the familial resemblance. He also writes about the grammar of philosophy, which provides the format or structure for ensuring that the correct questions are asked or the correct philosophical investigations undertaken. What is the nature of good is an incorrect question. The correct question is what actions are understood as good. Asking people what is good is silly, as anybody when asked that question could give numerous examples. They understand the concept good, what they don’t need is a philosopher telling them what good means. Philosophers when asking this question brings itself into discredit, as the answer is either I don’t or a definition that lacks application or validity to everyday life.* Politicians are also failing to formulate their questions correctly. What they ask is that asked by the politicians of the 1930s how can we the economy to health. What they should be asking is a series of questions about the economy, such as how can unemployment be reduced, when looking for policy solutions to all these individual problems they will be answering the big question, of how can we restore the economy to good health.

I can give examples to demonstrate my thinking. The British economy has a number of dysfunctions within it, but ones that the Neo-Liberals believe only require the one solution. These dysfunctions are:

• Slow and anaemic economic growth

• The highest trade deficit as a percentage of GDP for a developed country, as a consequence of a shrinking manufacturing industry

• An unbalanced economy, one in which the financial service sectors are booming and manufacturing is in slow relative decline, an economy also unbalanced in that the southeast and London are experiencing high growth and incomes while the other regions experience the reverse

• An economy that is increasingly failing to deliver for increasing numbers of people, who are denied the essentials of a good life, that is fair incomes, secure employment and good housing.

• Income inequality is now approaching those levels last seen in the dismal 1930s

• The economy is increasingly subject to speculative booms and busts in the various asset market, usually such busts originate in the property market

• A country which shares record levels of indebtedness with Japan. The majority of British debt is private sector debt, which an upward shift in interest rates could make unsustainable, as too many households would have difficulty managing their debt repayments

There are other dysfunctions that I could add to the list, however I had to end the list somewhere. Only today Areon Davis (Reckless Opportunists: Elites at the end of the Establishment) has in today’s Guardian newspaper outlined a different set of market dysfunctions, which could result in a repeat of the 2008/9 financial crisis. Yet the Neo-Liberals politicians always resort to the same set of policy options to deal with each of these dysfunctions. They are

• Vary interest rates, either lower or raise them

• Reduce regulation on business, thereby reducing the regulatory role of the state

• Cut taxes and government spending

• Recently they have added a new measure – quantitive easing, that is increasing the supply of money to the banks

What the British economy requires is a different set of policy options for each of these major dysfunctions. Why do these politicians believe that the same policy options should be prescribed for each policy? A doctor prescribes antibiotics to treat a bacterial infection, he would not use them a patient that suffered a cardiac arrest, yet this is exactly what the government does with economic policy making. It’s always the same prescription, whatever the problem.

The economy is a dynamic organisation that is constantly changing and each change in the economy offers new benefits or brings to the fore new problems. There can be no one theory of everything, while Neo-Liberalism offers some policy options suitable for some problems, that is all it can offer. If instead politicians realised that each new problem the economy threw up was asking a new question of them and not just some variant of an old question policy making would improve. To paraphrase Wittgenstein, economics is a series of investigations that ask different questions, each of which requires a different response.

*I am aware that my brief paragraph does an injustice to Wittgenstein’s thinking, as I have taken elements from ‘The Brown and Blue Books’ and ‘Philosophical Investigations’, which are dissimilar books written at different stages in the development of Wittgenstein’s thinking. However to do so suited my purposes.

When a visitor encountered the philosopher Democritius* in his garden, he to his surprise found him laughing uncontrollably. When asked why he was laughing, he said it was at the follies of mankind. If Democritius was living today he would have found plenty to laugh at in the follies of our leaders.

One of the more interesting of the Greek philosophers was the sceptic philosopher Pyrrho. This was a man so sceptical about the possibility of there being such as human knowledge, that he did not bother to look where he was going went he went walking, as he thought that if he was going to fall into a ditch there was little he could do to prevent it happening. While this story recounted by Diogenes Laërtius is apocryphal it does illustrate quite clearly the nature of his thinking. As all human knowledge was fallible, he said that we should be wary of putting too much trust in the great systems of the philosophers that claimed to ‘explain everything’. Why I value Pyrrho is he an  antidote to stupid thinking. Whenever I contemplate the latest popular fashion in contemporary thinking, I always think of Pyrrho. I am wary of the latest popular enthusiasms, whether it be for hygge, Gloop the philosophy of Gwyneth Paltrow or Neo-Liberalism, as on examination they all seem to rest on similarly filmsyl foundations.

Unfortunately politicians with a naive belief in rightness of free market economics are particularly prone to such stupid thinking. The politicians of the New Right,  despite their claims to realism are often the enthusiasts for the silliest of ideas. One such is the idea that the when the UK leaves the EU it can install an computer based system to record all foreign trade transactions. This scheme will operate so efficiently it is believed, that traders will find litle difference betwen the new trading system  and the current regulation free trade system. Traders will find it as easy to move goods in an out of the country as they do at present. The only flaw is that there is no such system anywhere in the world and the record of governments installing new computer systems is one of failure. This government has spent seven years trying and failing to introduce a computer system to pay benefits, the much derided universal credit system. If this scheme in which all the recipients of this benefit are already known and yet the government finds it impossible to get the scheme to work effectively, how can it possibly develop an IT scheme that will be able to handle the thousands of daily transactions that make up our international trade. Already the fallibility of the HMRC computer system enables thousands of people to avoid paying tax. Yet even although they know this, these Brexiters claim that they will be able to introduce a new marvellous IT system which will have none of the failings of any of its predecessors.

What Pyrrho would have advised these politicians and economists of the New Right to do; would have been to look at the past history of government failure in the procurement and introduction of new IT systems. This would have reminded the Brexit enthusiasts that there has never been a government IT scheme that has not been a magnificent failure.

If they were not convinced by that, he could have told them to look at the problems of IT in the defence system.  The operating system in our new aircraft carries is Windows XP, an operating system so outdated that Microsoft has stooped supporting it with updates. The vulnerabilities of this operating system were exposed when hackers (from North Korea)? were able to shut down so many of our hospitals that relied on this as an operating system. Also the broadband speeds available to these carriers does not exceed 8mb, a speed slower than most household broadband systems.  Pyrrho would have told these politicians to stop being foolish and indulging in stupid fantasies and instead address the reality of the real world of flawed computer systems.

Why blame economists when all the failures that I have outlined are those of the politicians? Quite simply because all these politicians of the New Right and our Brexit are believers in the economic philosophy called Neo-Liberalism. Neo-Liberal thinkers such as Friedrich Hayek and Milton Friedman have taught that mankind has invented the best possible of social institutions and that is the free market and that the role of politicians is merely to ensure the smooth operating of this market.

It would be anathema for these politicians to install customs barriers at our sea and airports, as that mean introducing a barrier into the smooth working of the free market. Their philosophy then poses for them an unsolvable problem. Having decided that the UK must leave the free trade area that is the Single Market and the Customs Union, how do they introduce customs barriers that are not customs barriers? They know that once they introduce customs checks on imports and exports at Dover, they face the possibility of there being long tailbacks of traffic. Some estimates state that these queues will be up to 15 miles long. Now having introduced a problem that has no solution, they resort to a fantasy answer. The IT system for exports and imports that they propose only exists in the realms of their imagination, it is incapable of an existence in the real world. Its nonsense but nobody in government wants to admit to this.

What puzzles me is the great majority of these politicians who are enthusiasts for this scheme studied philosophy at one of our elite universities as part of their Philosophy, Politics and Economics degree. Even although scepticism is not the fashionable mode of philosophy in our universities, philosophy departments do boast that they teach their students critical thinking. Obviously our politicians of the New Right seem to think that this is a skill that only applies to essay writing.

*Democritius was a philosopher who lived in the fourth century BC in the cityl of Adbera, Greece.

Weimar Britain 2010 – ?

There seems to be a gathering darkness in our society, unreason seems to increasingly be the language of our times. The darkness of unreason is said to have come from outside the political process, from  the extremists of the right who have been increasingly successful in infiltrating the political mainstream. Although there success is not entirely down to their own efforts, as they have been aided by collaborators from within the political mainstream.

Perhaps the most obvious example of this darkness is the increasing harassment of immigrants. All to often there are stories such as that of the grandmother of Singaporean origin who was sent back to her homeland, despite having a family in the UK. She was sent back penniless to a homeland where she had no family. Indifference often bordering on cruelty so often governs the actions of our politicians.

When I see the flourishing of unreason in society, I look to the past for explanation. One obvious parallel is the German Weimar Republic that was destroyed by the forces of unreason. One writer that tried to explain the rise of the forces of unreason was Ernst Junger. I find his book ‘On the Marbles’ particularly apposite. There exists within his narrative a wild uncivilised  family of huntsmen who live deep in the dark forest. This family breeds an exceptionally vicious and violent breed of dog, who are breed for nothing but fighting. In the climax of the book this pack of barbarous dogs takes on the hunting dogs of the foresters and destroys them. Now this barbarous family has control of the forest. There is one futile attempt later by the politicians to come to terms with the barbarians of the forest, but it ends badly in their death.

There is a darkness in the souls of us all, but a darkness that is suppressed by civilisation. Norbert Elias wrote of the significance of etiquette in making organised society and social  progress possible. When people started treating each other with courtesy and respect organised society becomes possible. These etiquette codes of behaviour or rituals are passed from generation to generations giving society its shape but once they are disregard or disrespected society begins to resemble a shapeless mass and loses its civilising aspect.* Football without rules is a meaningless undignified scramble and even the most aggressive and competitive of footballers who will resort to cheating to win a match, still accepts the need for rules. They know that if there were no rules to break there would be no game of football. Politicians increasingly resemble the cheating footballer but unlike them they don’t just want to break the rules to their own advantage, but they want to destroy the rules and reshape the game in their own image.

Ernst Junger’s allegorical tale was very prescient, there are dark groups in society who while they remain isolated and excluded from the mainstream, pose little threat to the larger society. If they are isolated in the depths of the forest they are little threat to the civilised whole. However once this dark group is welcomed into the mainstream of the body politic, their very ruthlessness enables them to rise to the top. Just like Junger barbarous dogs they destroy the opposition, an opposition that has not been breed for fighting.

This dark group existed within German society, they were the German nationalists. The most extreme of which were the Nazis. Mainstream politicians thought there ideas insane, such as wanting to return the bulk of the population to the land. Farm work and rural life they believed led to the cultivation the manliness virtues that the Nazi’s admired. Too many German men lived soft easy lives in the town and had lost the Aryan virtues that the Nazis admired. Having such crazy ideas led to the political elite believing that such simpletons could be easily managed.

When the economic crisis of 1929 lead to widespread unemployment, which many blamed on the government. The discredited ruling coalition thought that by incorporating the increasingly popular Nazi’s into government they come benefit from their popularity. They would be a useful counterweight to the powerful communist party. The conservative intellectuals such as Franz Von Papen thought that they could easily manage the ‘unsophisticates’ of the Nazi Party. Instead these conservative politicians lacked the ruthlessness of the Nazis and were out manoeuvred by them. The well behaved dogs of the conservative right proved no match for the wild dogs of the Nazis.

Once the Nazis gained control they removed those civilised constraints that kept those dark instincts of the German personality suppressed. Soon civilised Germans were treating there Jewish neighbours in the most cruel of manners. Once those civilised rules of social interaction were removed the darkest of behaviours become common. Millions of Germans knew of the existence of the death camps, yet only a small number of German opposed their use. Ordinary German citizen if they knew of Jews hiding form the authorities would not hesitate to betray them.

What I believe is that once the barbarous dark forces in society are admitted into the mainstream of the body politic they corrupt the political process and take it over. There barbarous belief systems cannot tolerate any diversity opinion or difference, so must they destroy it. That destruction as in Weimar Germany will be the destruction of the democratic system.

While the dark forces in Britain remained isolated and excluded from the mainstream, they could be tolerated as the harmless indulgence of a tiny minority. However in Britain as in Weimar Germany changes occurred within the governing elites that made possible the introduction of the barbarous views of the extremists. Within the conservative political spectrum there had always been a significant minority that hated the post war settlement. High personal taxation and the tax revenue used to fund of social welfare programmes and the health service they saw the illegitimate action of government. They saw the economic crisis of the 1970s as an opportunity to destroy the social democratic state. Whether it was the free market economics of Milton Friedman or the Neo-Liberalism of Hayek and Rand, they had a brutal philosophy. What they wanted was the re-create the society that pre-dated Hobbes ‘Leviathan’. They wanted a society of in which ‘nasty brutish’ men, were not restrained in their actions by the state. It was human competitiveness not social organisation they believed was the motor for economic and social progress.

As this philosophy increasingly took hold on the Conservative party, its policies became more and more brutal as it sough to recreate the society of ‘nasty and brutish’ men. Although policies were couched in morally virtuous terms such as taking people out of the dependency culture and making them self sufficient, all but the most deluded of Conservative must have realised they were practising a policy of cruelty. This policy was corrupting of the people making the policy, as implementing cruel social policies is not a morally neutral activity, it corrupts the mind. The poor become defined as a subhuman species unworthy of the decencies of human society.

With this degradation of moral sensibilities conservative politicians have not hesitated to exploit the those dark atavistic sentiments on race and ethnicity to win support. However what they fail to realise is that they these sentiments are not something that can used when needed for electioneering and then forgotten. Once they have been imported into the political dialogue they remain there. These politicians so resemble so many Franz Von Papen’s  who thought that they could use the extremists for their own ends.  Similarly these conservative politicians are offering extremists access to power, an access that they will exploit.

Again Ernst Junger’s allegoric tale offers a useful explanation of the current situation. Bad as the current conservative politician are, there are the much more dangerous extremists who are beginning to enter the political mainstream. The conservative politicians are like the hunting dogs in his tale, they are trained to hunt herbivores and not to fight other dogs. I liken them to they hunting dogs because they are trained to hunt weak herbivores of society, the poor and less well off majority. Neo-liberalism of the Ayn Rand type has schooled them in how to attack the less well off majority to benefit of the billionaires class, but it has not schooled them in how fight off the extremists. I fear that our conservative Neo-liberal politicians, will be as with Weimar’s conservative politicians little more than a conduit to power for the extremists. 

  • I must confess that my summary of Norbert Ellias thinking does not do justice to him. His ideas are far my complex that my summary would suggest.

The British Army a metaphor for Britain’s economic decline

When you wish to understand what is happening in an economy, the answer comes from the small things. Not from the micro-economics of the classical economist but from stories repeated about events in the real world. The source of inspiration for this essay was a comment from my daughter who has friends who are married to soldiers. Their husbands are very discontented, as they seem to waste their time on a series of seemingly meaningless tasks. It seems as if the bad of practices of national service days are being reinvented when soldiers could be told to do such meaningless tasks as cut the grass with nail scissors. If they are correct the British army seems to be at present an organisation without purpose or meaning.

This I can contrast with the attitude of a former pupil of mine who served with the army in Northern Ireland. I thought that he would have hated service there because of the dangers. Instead he loved it, he had two posting there and was considering leaving the army because his next would be an action less posting to Germany. Anybody with even the briefest knowledge of the British army knows that it can do mindless routine like no other organisation. He as did many others join the army for the excitement, a life out of the routine. I cannot describe in words the excitement he told me he experienced on an active mission hunting an IRA unit.

A dysfunctional army and discontented soldiers is a metaphor for so much of contemporary Britain. There are countless business organisations that demonstrate the same lack of purpose, due to poor leadership and with a discontented workforce. What the British army demonstrates is how state and private sector organisations become increasingly dysfunctional in a society that appears to be in decline.

Britain has been in decline since it lost its Empire and in the words of Dean Acheson it ‘has lost an empire and has not yet found a role’. In the post war period many politicians attempted to find a new role for Britain. At first it seemed its future lay with Europe and the country joined the EU. However being one of the leading nations in the EU did not satisfy the political class, as it had not injected the hoped for dynamism into British economy and society. What the political class wanted was the great shock that would electrify the economy and restore it to economic health and they found the needed great shock they needed in the practice of Neo-Liberal economics.

One of the great ideas of the Neo-Liberal revolution is the idealisation of the private sector business model. In consequence much of the public sector was transferred to private ownership and that included much of the defence department. Now procuring weapons for the army is in the hands of a private sector organisation called the Defence Procurement Agency. This department was intended to be a commissioning agency, that would outsource the design and production of defence equipment to private sector companies, so getting the best deal for the armed services from the competing defence contractors.

It was assumed that by outsourcing expertise to the private contractor the government would cut out the expense of employing its own specialists and it could leave the difficult decisions about  design and production to the private sector companies. Unfortunately these very same companies also practised cost cutting and reduced the most expensive labour costs, which were the design engineers. Outsourcing of design has led to a multiplicity of contractors involved in producing a product that usually fails to serve its purpose. The new army automatic rifle (SA80) costing more than a £470 million is an example of the abject failure of this policy*. It tends to jam when used in action. Special forces units who are constantly in action never use it because of its unreliability, instead preferring to use the American alternative. Having to make do with inferior and unsuitable equipment is destructive of morale and it is said that in the Royal Navy service morale has never been lower, as it is the service most affected by having to operate with poor and inadequate resources.

Generals and politicians have with enthusiasm adopted the cost cutting practices of Neo-Liberalism. This means that in consequence the cost of having realistic large scale training exercises is too great in terms of men and resources. There is just not the money to keep the army trained in is a state of readiness for war. All to often soldiers are given home leave, as this is the least expensive option. One way politicians and the generals have tried to overcome this problem is by cutting the numbers of serving soldiers and instead relying upon the cheap part time reserve solder to fill the gaps in the time of crisis. Forcing experienced soldiers to leave the army because they are too expensive is destructive of morale.

Warrant officers are the unsung heroes of the army. These non-commissioned officers are the men who make the regimental system effective. They have years of service and are the men that keep the regiment operating at maximum efficiency. Officers come and go, but they are always there. However they are expensive and the government and generals decided that they should reduce their numbers in a cost cutting exercise.  A number of warrant officers who received their redundancy notices were on active service in Afghanistan. Many private and state organisations have suffered similar drops in service effectiveness, when they have got rid of much of the middle management.

Neo-Liberal theory emphasises the great value of the entrepreneurial leader, societies movers and shakers, whom Ayn Rand states the billionaire class. This has been applied to the army as the cost cutting has been at the expensive of the junior ranks, not the generals. It is believed that all is needed is the great man who will meld the disparate units that make up an army unit into an effective fighting force at the time of crisis. Skills, training and experience are almost irrelevant in the junior ranks, as what matters is the genius of the leader. Therefore whatever cuts are made they should not apply to the generals, as they are the key personnel who will make the army great in the times of war. In consequence the British army is one of the most ‘over generalled’ in the world. The British army is about the size of the American marine corps which has only a third of the generals.

The great weakness of current British army is that it does not have a large cadre of outstanding leaders. Too many of the current generals are quite undistinguished and there are too many duds amongst them. When an American general addressed a conference of senior British army staff to discuss the lessons learnt from the conflict in Afghanistan he said gentlemen you have failed. It is an open secret that the Americans have a very poor opinion of the British army or more particularly its generals.

There is a very revealing story from Afghanistan which reveals the poor quality of British generalship. There was an airbase in which was the responsibility of a British and American general. The British general was responsible for the defence of the perimeter. He left some watch towers unoccupied.The Taliban spotted this and crept in and destroyed a number of American aircraft. The American General who was responsible for the defence of the aircraft was sacked, although he was comparatively blameless, while the British general was not only not sanctioned but he was promoted to a higher grade. Incompetence does not seem a bar to seniority in the British army.

This is why my daughters friends husbands find that they are doing no real soldiering, it is because they belong a dysfunctional organisation that is unable to effectively utilise their talents. Recently the government was criticised for failing to respond adequately to Hurricane Irma. The Americans and French evacuated their citizens from the islands in the before the hurricane struck, the British did nothing. While much of the blame for the inaction must rest with the politicians, it is also likely that if the defence minister had asked for immediate action, the armed services would have struggled to respond.

What the British army demonstrates is the current British vice, over investment in a poor and undistinguished leadership and underinvestment in its workforce. Almost all British companies have experienced a ruthless weeding out of middle management and of its more expensive and skilled staff. Once the British Atomic Energy Authority was one of the world leaders in nuclear engineering, but since privatisation the new company disposed of the expensive engineers and became largely a commissioning organisation. Now when Britain needs to build new nuclear power stations it lacks the expertise to do so and instead relies upon outsourcing the task a French company EDF. The leadership of the nuclear industry is so poor that it is not concerned that the two nuclear power stations that EDF is building in France and Finland are so delayed by construction problems and cost overruns that are years behind schedule. Just as in much of British industry a poor leadership makes poor decisions.

*The initial model of this rifle used by the army was so poor that it had to be modified and re-engineered by the German manufacturer Heckler and Koch.

*The branch of the armed services that has suffered most from the lack of in house expertise and poor leadership is the Royal Navy. Its new £1 billion Daring class destroyers are so badly engineered that they are prone to break down. The only solution is cut large holes in the sides of the ships so engineers can install new power units. A ‘patch up’ job that will be extremely expensive and could double the cost of equipping the navy with these new ships.

The Cult of Neo-liberalism and the bizarre beliefs and practices of its believers

Cult movements are supposed to appeal only to the marginalised in society, that is the losers desperate to find a way of out the dire circumstances in which they find themselves. Yet evidence shows that cult movements are as equally likely to appeal to the rich and powerful. The Orange movement with its emphasis on sexual freedom was a movement that appealed largely to the young and wealthy. However a cult movement of the rich and powerful can avoid being labelled as disparagingly as such because they have control of the media. Cult like movements redefined as mainstream political or social ideologies much like established religious practices. In a secular society such as ours cult movements will lack the mystery and religion usually associated with such and instead claim ‘realism’, to be a practical movement for individual and societal improvement. The cult that currently grips the imagination of the rich and powerful is Neo-Liberalism.

Believers in Neo-Liberalism as with all cult members have a fervent belief in the rightness of the message and reject any evidence to the contrary. To paraphrase George Orwell it central belief is ‘private enterprise good, public or state enterprise bad’. Currently in Britain all our prisons are being transferred to private management. Despite reports from the prisons inspectorate that such prisons are poorly managed, largely due to cost or staff cutting measures intended  to turn prison’s management into a profit making activity, political leaders seem oblivious any problems arising from the privatisation of the prison service. Riots, rising prison suicides are not the things to turn the political leaders away from their belief that prisons can only be run successfully, if they are under private management. There is nothing to match the fervour of the converted for their cause. When criticised they will say that the reforms they have introduced will take time to take effect and what is being witnessed now are the painful birth pangs of a new society coming into being. Without wishing to name politicians I feel they are so similar in nature to the Jehovah’s Witnesses that come to my door promising me salvation if become a member. A salvation promised on as little evidence as that provided by the cultish Neo-Liberals.

All cults have a charismatic leader, one who have a message one which points out the failings of current society and the way to a brighter and better future. Scientologists had Ron Hubbard, Neo-Liberals have three Friedrich Hayek, Ayn Rand and Milton Friedman. Followers of each cult treat the writings of the founders as holy texts and try to follow to the letter their writings . It helps if the charismatic leaders as death sanctifies their writings, much as earlier death gives pop stars that aura of specialness and which boosts their record sales. All these leaders were persecuted and vilified in their own societies. Ron Hubbard was dismissed as a fraudulent science fiction writer and the prophets of Neo-Liberalism were persecuted by the liberal social democratic establishment of their time, who dismissed their writings as lacking merit. As all of these prophets are dead there writings cannot be subject to revision making it much easier for them to be seen as the unalterable holy writ.

One of the holy writs of Neo-Liberalism is that any state intervention in the market is hateful and destructive. For British Neo-Liberals the very personification of this hateful state intervention is the  European Union (EU). Any damage inflicted on the economy or social fabric of the nation occurring from a precipitate exit from the European Union is a price worth paying. When the Global Institute for Economic Affairs states that leaving the EU will diminish national income by 10% they dismiss it as a mere trifle. A valid comparison is with the regime of Pol Pot, they have a wish to return the economy to year zero so they can remake it according to the collective scripture of Ayn Rand, Milton Friedman and Friedrich Hayek. Fortunately for this group of very rich and powerful Liberals the martyrs that will be sacrificed are the less rich majority, not the rich minority.

A cult movement also sanctities its members and demonises outsiders. Ayn Rand writes that the saviours of mankind are the rich and powerful or more precisely the billionaires. All the powerful Neo-Liberals imagine themselves part of this class whether they are or not. This also makes them very greedy for money, as wealth demonstrates that they are one of the elect. Ayn Rand characterises the poor and desperate as the undeserving poor, who when they die in their thousands in ‘Atlas Unchained’  meet a fate they deserve. This makes tax avoidance a moral cause as by paying taxes the rich are merely giving money to the undeserving poor on whom it is wasted. Politicians can claim high taxes on the rich are immoral, as it takes money away from the rich who will use it well and gives it to the poor who will squander it. A morality given common sense expression by the Surrey woman who wrote that the rich have greater need of money than the poor as they have more things on which to spend their money. The wants of the rich are many according to her reasoning, whereas the wants of the poor are few, so they only don’t require much money.

Media commentators who write about the death of Neo-Liberalism misunderstand the persuasive power of a cult. Believers are immune to rational argument, the collapse of the economy on Brexit will leave them unmoved. There is a tribe in New Guinea who worship Prince Phillip as a God and who believe that one day he will come and distribute to them the wealth that was unfairly stolen from them by the Europeans. All they have to do is to await the arrival of Prince Phillip and the prosperity that he will bring. Neo-Liberals are as rational in their beliefs as this New Guinea tribe. They will believe that whatever economic disasters occur during Brexit, are unrelated to their practice of Neo-liberalism. The failures in the economy be a consequence of the government failing to implement Neo-Liberal policies properly, if only they had been more Neo-liberal in their approach to policy making all the problems that afflict the economy would never have occurred.

Neo-liberalism will only die when all its powerful proponents are removed from power. Until then Neo-liberal policy making will be practised by our government.